Star Cement shares hit 52-week high on high volumes; buy, sell or hold?

Shares of Star Cement Ltd hit a fresh 52 week high today led by heavy volumes in the afternoon session. Star Cement stock zoomed 9.44% to Rs 136.92 in the afternoon session against the previous close of Rs 124.45 on BSE. Earlier, it opened higher at Rs 127.70. Total 1.58 lakh shares changed hands amounting to a turnover of Rs 2.10 crore on BSE. Market cap of the firm rose to Rs 5403 crore. This is the highest volume of company’s shares traded this month. The previous highest volume of shares was logged on May 18, 2023 at 1.13 lakh shares in May 2023.

The stock hit a 52-week low of Rs 81.50 on June 17, 2022 on BSE. The relative strength index (RSI) of Star Cement stock stands at 55.8, signaling it's trading neither in the overbought nor in the oversold zone. Star Cement stock is trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages. 

The cement stock has gained 49.22% in a year and risen 18.61% this year. The stock has gained after two days of consecutive fall.

Gaurav Bissa, VP, InCred Equities said, "Star Cement was in a two-year consolidation. It witnessed breakout from bullish cup and handle pattern on weekly charts followed by swift upside. The stock has now bounced after making a retest of cup and handle breakout implying it can now start a fresh uptrend in the coming days. The RSI is on the verge of a breakout and once it trades above 70 levels it can give a strong push to the stock price. Star Cement has already seen a bullish macd crossover which generally results in a strong upside in the price. These factors suggest that the stock looks poised for a move to 150 levels going forward."

Abhijeet from Tips2trades said, "Strong Q4FY23 results have led to a strong uptrend in Star Cement which now has broken strong resistance of Rs 132 on the Daily charts today. Possibly an extended rally till Rs 142 looks likely but the stock price could get into overbought zone. Hence, existing investors can hold with a strict stop loss of support of Rs 127."

In the March 2023 quarter, the firm reported a 8.71% rise in profit at Rs 96.12 crore against Rs 88.42 crore profit in the corresponding quarter of the previous fiscal. Sales climbed 10.12% to Rs  825.04 crore in the March 2023 quarter against Rs 749.24 crore in the March 2022 quarter. Operating profit zoomed 46.60% to Rs 166.19 crore for the quarter ended March 2023 against Rs 113.36 crore in the corresponding quarter of the previous fiscal.  

In the last fiscal, sales zoomed 21.74% to Rs 2704.85 crore against sales of Rs 2221.82 crore in the previous fiscal. Net profit zoomed 0.34% to Rs 247.60 crore in FY23 against Rs 246.77 crore in the previous fiscal. Operating profit surged 35.67% to Rs 468.39 crore for the March 2023 fiscal against Rs 345.25 crore in the previous fiscal.  

After the earnings were announced on May 19 this year, Rajesh Ravi, Institutional Research Analyst, HDFC Securities and Keshav Lahoti, Institutional Research Analyst, HDFC Securities maintained an add call on Star Cement with a revised target of Rs 130/share.

“We maintain ADD on Star Cement with a revised TP of INR 130/share (8x its Mar-25E consolidated EBITDA). Star’s reported a decent 7% YoY volume growth in Q4FY23. Despite a major fall in incentive accruals, its unit EBITDA recovered ~INR 150 per MT QoQ to INR 1346 per MT (industry best for the fourth consecutive quarter!) on better logistics management and op-lev gains. Star’s 12MW WHRS has become operational in Q1FY24. This along with other productivity gains and energy cost tailwinds will keep the margin buoyant despite the GST incentives expiration. Star’s ongoing expansion will increase capacity by 70% to 9.7mn MT by H1FY25E,” said the earnings review report.  

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